Orkla Asa · OSL:ORK
Orkla Asa — Q2 2018 Earnings Presentation
34 slides from Orkla Asa's earnings presentation, Jul 13, 2018
Slide 1: Second quarter results 2018
1 Second quarter results 2018 13 July 2018 Peter A. Ruzicka, President & CEO
Slide 2: Highlights Q2-18: Profit improvement in Branded Consumer Goods
Highlights Q2-18: Profit improvement in Branded Consumer Goods • Good growth across our Finnish and CEE based businesses, and strong recovery in ice cream ingredients following a weak first quarter • Low campaign activity and sugar tax related volume decline in Norway • Underlying EBIT (adj.) margin
Slide 3: Branded Consumer Goods YTD 2018: Good growth in Food Ingredients offset by lower campaign activity
Branded Consumer Goods YTD 2018: Good growth in Food Ingredients offset by lower campaign activity and impact from increased sugar tax BCG organic growth Organic growth Q2-18 YTD by business area 2.8% Orkla Foods 1.0% 1.8% 1.6% 0.7% 0.7% 0.8% 0.5% Orkla Confectionery -4.4% 0.0% & Snacks 0.1% -0.2% O
Slide 4: Branded Consumer Goods YTD 2018: Weaker sales combined with growth investments led to negative gap
Branded Consumer Goods YTD 2018: Weaker sales combined with growth investments led to negative gap + 0 - 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD 2018 Organic sales growth Underlying growth in fixed costs1 4 1Fixed cost excludes A&P and Depreciation
Slide 5: Changes in Orkla's Group Executive Board
Changes in Orkla’s Group Executive Board As from 1 October 2018, the Group Executive Board will consist of the following members: Peter A. Ruzicka will continue in his position as Ann-Beth Freuchen, (today: CEO Orkla President & CEO Confectionery & Snacks): CEO Orkla Foods (Nordics and Baltics) Jens
Slide 6: Financial performance
6 Financial performance Jens Bjørn Staff, CFO
Slide 7: 9% growth in Group EBIT (adj.)
9% growth in Group EBIT (adj.) Q2 Key figures Q2-18 ∆vs LY Operating revenues 10,017 +3% EBIT (adj.) BCG 1,050 +3% EBIT (adj.) Orkla Investments 111 +50% EBIT (adj.) HQ/Other business -42 +35% EBIT (adj.) 1,119 +9% Other income and expenses -97 EBIT 1,022 +12% Profit from associates 105 -9% Net inte
Slide 8: Branded Consumer Goods Q2-18: Revenue growth driven by M&A
Branded Consumer Goods Q2-18: Revenue growth driven by M&A +2.1% 9,705 9,505 +0.5% +2.8% -0.2% -0.5% BCG operating Organic growth FX M&A BCG operating revenues Q2-17 revenues Q2-18 Organic Growth adjusted for loss of C&S distribution business 8 Amounts in NOK million
Slide 9: Branded Consumer Goods Q2-18: Margin improvement in Q2
Branded Consumer Goods Q2-18: Margin improvement in Q2 ∆ BCG U.EBIT (adj.) margin Q2 ∆ BCG U.EBIT (adj.) margin YTD Q2-18 Underlying margin Underlying margin development: +0.2% development: 0.0% 10.8% 10.6% 10.7% -0.2pp 0.3pp 0.0pp 10.4% -0.1pp 0.0pp 0.0pp EBIT M&A and Variable Other EBIT EBIT M&A a
Slide 10: Orkla Foods
Orkla Foods Growth despite challenging retail environment in Norway Q2-18 YTD Q2-18 Revenues 3,845 7,697 • Good organic growth in Central Europe, India and Finland Organic growth 0.4% 1.0% • Volume decline in Scandinavia due to EBIT (adj.) 439 839 changed campaign activity and increased retail price
Slide 11: Orkla Confectionery & Snacks
Orkla Confectionery & Snacks Sales in Norway impacted by sugar tax and loss of distribution contract Q2-18 YTD Q2-18 Revenues 1,435 2,888 • Flat YTD organic growth adjusted for loss of Wrigley distribution contract Organic growth -5.9% -4.4% Adj. for Wrigley -1.4% flat • Good sales and profit growth
Slide 12: Orkla Care
Orkla Care Profit growth from acquisitions Q2-18 YTD Q2-18 Revenues 2,032 4,108 • Total revenue growth in Q2 of 12% driven by M&A Organic growth 1.3% 0.4% • Growth in most Business Units helped EBIT (adj.) 264 562 by more sales days EBIT(adj.) growth 7.8% 8.1% • Decline in Orkla Health and House Car
Slide 13: Orkla Food Ingredients
Orkla Food Ingredients Good performance boosted by good ice cream season Q2-18 YTD Q2-18 Revenues 2,462 4,644 • Strong Q2 due to increased sale of ice cream ingredients Organic growth 2.7% 2.2% • Profit improvement driven by ice cream EBIT (adj.) 176 233 ingredients, sales & distribution businesses
Slide 14: Orkla Investments
Orkla Investments Progress for Hydro Power, another tough quarter for Jotun Hydro Power Fully consolidated into Orkla financial statements Volume Power prices1 EBIT adj. (GWh): (øre/KWh): (NOK million): Q2: 615 (736) Q2: 37.4 (25.7) Q2: 97 (79) YTD: 1,097 (1,272) YTD: 37.3 (26.8) YTD: 156 (133) Fina
Slide 15: Jotun (42.6%)
Jotun (42.6%) Improved momentum in Q2 YTD Q2-18 YTD Q2-18 comments Operating income 8,810 Change vs LY 6.8% • Improved sales momentum in Q2 – Good growth in Decorative Paints and improvement in Protective Coatings Operating profit 933 – Marine Coatings still heavily affected Change vs LY -8.1% cycli
Slide 16: Operating Cash flow
Operating Cash flow Cash from operations (excl. financial investments) Cash flow per 30.06 2018 2017 Operating profit 1,882 1,717 Amort., depr., and impairment 602 625 Change in net working capital -722 -296 Net replacement investments -684 -484 Cash from operations 1,078 1,560 16 Amounts in NOK mil
Slide 17: Changes in net debt Q2-18
Changes in net debt Q2-18 107 3 863 244 766 686 2 665 642 499 Net debt 31 Expansion Net paid to Cash flow Net purchase Tax, FX effects Net debt 30 March 2018 and sale of shareholders from of shares dividends June 2018 companies operations received, net financial & other items 17 Amounts in NOK milli
Slide 18: Summary and outlook
1 8 Summary and outlook Peter A. Ruzicka, President & CEO
Slide 19: Profit improvement in Branded Consumer Goods
Profit improvement in Branded Consumer Goods Key takeaways YTD Q2-18 • Growth in Branded Consumer Goods driven by M&A • Good growth in Finland and Central Eastern Europe • Low campaign activity and sugar tax related volume decline in Norway • Recovery in Ice Cream ingredients in Q2 • Underlying BCG
Slide 20: Growth in the Home Care Category
Growth in the Home Care Category Expand with existing portfolio across markets Set the agenda for category development and growth Invest in brands to stay relevant for consumers 20
Slide 21: Expand with existing portfolio across markets
Expand with existing portfolio across markets A selection of initiatives 21
Slide 22: Q&A
2 2 Q&A Peter A. Ruzicka, President & CEO Jens Bjørn Staff, CFO
Slide 23: Appendices
‘Orkla Appendices
Slide 24: Alternative Performance Measures (APM)
Alternative Performance Measures (APM) EBIT (adj.) EBIT (adj.) is operating profit or loss before other income and expenses (OIE). The main purpose of this performance measure is to identify material non-recurring items and items substantially relating to other periods to ensure that the changes in
Slide 25: Group income statement
Group income statement Change Change Change Change Q2-18 Q2-17 in MNOK in % YTD-18 YTD-17 in MNOK in % Operating revenues 10,017 9,771 246 3% 19,728 18,852 876 5% EBIT (adj.) 1,119 1,025 94 9% 2,016 1,925 91 5% Other income and expenses -97 -116 19 -16 % -124 -203 79 -39 % EBIT 1,022 909 113 12 % 1,
Slide 26: Key figures: Orkla Foods and Orkla Confectionery & Snacks
Key figures: Orkla Foods and Orkla Confectionery & Snacks Orkla Foods Q2-18 Q2-17 Change YTD -18 YTD -17 Change Operating revenues 3,845 3,977 -132 7,697 7,735 -38 EBIT (adj.) 439 434 5 839 826 13 EBIT (adj.) margin 11.4 % 10.9 % 0.5 ppt 10.9 % 10.7 % 0.2 ppt Orkla Confectionery & Q2-18 Q2-17 Change
Slide 27: Key figures: Orkla Care and Orkla Food Ingredients
Key figures: Orkla Care and Orkla Food Ingredients Orkla Care Q2-18 Q2-17 Change YTD -18 YTD -17 Change Operating revenues 2,032 1,813 219 4,108 3,671 437 EBIT (adj.) 264 245 19 562 520 42 EBIT (adj.) margin 13.0 % 13.5 % -0.5 ppt 13.7 % 14.2 % -0.5 ppt Orkla Food Ingredients Q2-18 Q2-17 Change YTD
Slide 28: Net financial items
Net financial items FY 2017 Q2-17 Q2-18 Net interest expenses -149 -39 -32 Currency gain/loss -3 -1 0 Result from Share Portfolio and dividends 54 3 0 Other financial items, net -78 -20 -4 Net financial items -176 -57 -36 28 Amounts in NOK million
Slide 29: Statement of financial position
Statement of financial position 30.06.2018 31.12.2017 Intangible assets 19,854 19,921 Property, plant and equipment 11,809 11,683 Investments in associates and joint ventures etc. 4,112 4,108 Non-current assets 35,775 35,712 Inventories 5,799 5,684 Inventory of development property 125 113 Trade rec
Slide 30: Cash flow
Cash flow H1-18 H1-17 FY-17 Operating profit 1,882 1,717 4,423 Amortisation, depreciation and write-downs 602 625 1,313 Gain from operations moved to Investments and sold entities 0 -2 -299 Change in net working capital -722 -296 18 Net replacement expenditures -684 -484 -1,050 Cash flow from operat
Slide 31: Strong balance sheet and financial flexibility
Strong balance sheet and financial flexibility Net interest-bearing debt (NOK million) Net gearing 7 805 8 056 0,23 0,24 5 661 0,18 3 863 0,12 14 0.00 2014 2015 2016 2017 Q2-18 2014 2015 2016 2017 Q2-18 31
Slide 32: Debt maturity profile
Debt maturity profile Average maturity 4.5 years 3 500 3 000 2 500 2 000 1 500 1 000 500 0 2018 2019 2020 2021 2022 2023 2024 2025- Unutilised credit fasilities Drawn amounts 32 Amounts in NOK million
Slide 33: Funding sources
Funding sources 1.1 Unutilised credit facilities 3.5 Banks Bonds and CP 2.6 Cash, cash equivalents and interest bearing assets 2.4 33 Amounts in NOK billion
Slide 34: Your friend in everyday life